Peter Kent - Cryptocurrency All-in-One For Dummies

The remaining cryptocurrencies in the top ten keep bouncing on and off the list, but Table 4-1shows some that were on the list more consistently in 2021.

TABLE 4-1Some Top Ten Cryptos As of 2021

You can dive into the top 100 major cryptocurrencies and still not find the one you want to have a long-term relationship with. At this point, selecting cryptocurrencies that match your portfolio really becomes like online dating. You’ve got to make some decisions based on first impressions and then go on dates (start making small investments and do more research) to discover whether a currency is worthy of a bigger chunk of your crypto portfolio. Table 4-2lists some options.

TABLE 4-2Some Top 100 Cryptos as of 2021

As an alternative to selecting cryptocurrencies by market cap, the best way to truly diversify your portfolio, for both value and growth purposes, may be to go about selecting cryptocurrencies by category. After you’ve flipped through the categories and selected the finalists that best fit your risk tolerance (see Book 5, Chapter 2), you can then move on to advanced investing techniques throughout the later chapters of Book 5.

Based on their popularity and total market cap as of 2021, here are some of the most popular cryptocurrency categories and the leading cryptos in each space. The following sections describe just a few examples of many categories in the exciting cryptocurrency world; you may recognize some of the currencies from their coverage earlier in this chapter. Other people may categorize these cryptos differently. Some popular cryptocurrency categories include the following:

Gaming/gambling

Supply chain

Transportation

Medical

Internet of Things (IoT)

Keep in mind that some categories are hotter as of this writing, but others may have become more popular by the time you get this book in your hands. Also know that some cryptos are hybrids of multiple categories and are hard to fit in only one box. You can find different crypto categories on websites such as www.upfolio.com/collections#Go and www.investitin.com/altcoin-list/ .

Payment cryptos are by far the biggest category in terms of total market cap. In this group, you find cryptocurrencies that mainly aim to be used as a store of value, transaction, and payments, just like fiat currencies such as the U.S. dollar. Examples of cryptocurrencies that fall into this category include the following:

Bitcoin (BTC)

Litecoin (LTC)

Bitcoin Cash (BCH)

OMG Network (OMG)

Dash (DASH)

Ripple (XRP)

Tether (USDT)

With Bitcoin as the pioneer, it is no wonder that this category started out being so popular. Blockchain technology can be applied to so much more than just payment systems. Check out Book 2, Chapter 1for more current blockchain uses and potential future applications.

Privacy cryptos are heavily focused toward transaction security and anonymity, a lot more than those in the payment category are. In fact, the idea that Bitcoin and other cryptocurrencies in the payment category are fully anonymous and untraceable is a common misconception. Many blockchains only disguise users’ identities while leaving behind a public record of all transactions that have occurred on the blockchain. The data in the ledger often includes how many tokens a user has received or sent in historical transactions, as well as the balance of any cryptocurrency in the user’s wallet.

Privacy cryptos can be a bit controversial because authorities see them as an illicit tool that makes it possible for criminals to engage in illegal activities, such as money laundering. Nonetheless, some of them have gained popularity. Here are some examples:

Monero (XMR): Monero is the most famous privacy crypto as of 2018.

Zcash (ZEC): Zcash is similar to Monero but has a different protocol (set of rules). Check it out at https://z.cash/ .

CloakCoin (CLOAK): A lesser-known privacy crypto, CloakCoin has a number of added layers of security. See www.cloakcoin.com/en .